Size of Units Approximate - Alert
By Richard Marmor, Esq.
AZSA Legal & Legislative Chair
A class action lawsuit a few years ago resulted in our adding a provision to the AZSA Lease highlighting the fact that all references to the size of the leased space are approximate.
Hopefully, those of you still hanging onto your old leases have followed our recommendation and done the same. Such a provision makes it much more difficult for a tenant to trump up a lawsuit based upon alleged misrepresented space sizes.
A new but similar threat has arisen from an unexpected quarter: the Arizona Department of Weights & Measures.
An unreasonable tenant was unable to shoehorn a trailer into what was referred to on the facility’s website as a 10x10 space. Unwilling to pay the additional rent for a 10x15, and effectively blocked from suing the operator by the size-approximation clause of the AZSA Lease in use at the site, he found a creative way to strike out at the operator. He filed a complaint with the Arizona Department of Weights & Measures.
An inspector from the department showed up at the site and measured not only the unit in question, but seven additional units as well. What he measured was the floor space within the unit, using the insides of wall faces and the back of the door. The unit did not measure 10'x10', nor did any of the other units measured.
The inspector found that the actual sizes did not match the advertised sizes on the facility’s website, and recommended civil fines. Such fines can run into the thousands of dollars, depending upon how the infraction is determined.
AZSA believes that there are several failings in these findings, among them whether the weights and measures statutes and regulations even apply to the rental of commercial real property. Significantly, there is also the question of what standard is to be applied in measuring such space.
The standard most widely applied in all of real estate, not just in self-storage, and the one likely applied by your architect when (s)he drew up the plans for your facility, are those promulgated by the Building Owners’ and Managers Association, which have been adopted by the American National Standards Institute. The ansi/boma standard recognizes that there is a difference in all of real estate between the “usable square feet,” i.e., the area you could carpet, and the “rentable square feet,” which is defined as the usable square feet plus some measure of “common area.” In office buildings, for example, the common areas would include portions of hallways, lobbies, bathrooms and the like. In self-storage, the common area is generally limited to portions of the wall thicknesses, measuring from the mid-thickness of any shared walls and the outer skin of any exterior wall. Measure any of your units, and you will likely find that your dimensions tie out when you include those wall portions.
As of the time of this writing, the matter is pending, and several administrative steps remain. In the interim, what we naturally want to avoid is a state department thinking that it has discovered a rich new avenue to explore, with facility after facility being visited by hopeful inspectors.
AZSA RECOMMENDATIONS
No matter how this ultimately shakes out, AZSA strongly recommends that all operators immediately take the following steps:
- Change your advertising. In all websites, advertising or materials in which you specify units by size, add a footnote somewhere in those materials to the effect that “All space sizes are approximate.” This is critical.
- Add a sign: Place a small sign somewhere in your office to the same effect: “All space sizes are approximate.”
- Modify your lease. If you have not already done so, add a provision to your lease such as:
Space sizes are approximate. Occupancy of the leased space confirms that the size is satisfactory to you.
Better yet take this opportunity to transition to the AZSA Lease. It’s easy to implement.
Watch this newsletter for future developments.
[This article deals with a law related subject at a general level and is not intended for you to rely on. You should consult a lawyer before making a final decision in a situation involving any legal issues.]
Richard Marmor, Esq. is a self-storage consultant, facility owner and former facility operator in the Phoenix area. He is also the founding President and current member of the Board of Directors of the Arizona Self-Storage Association, serving as Chair of the Legal and Legislative Committee.
Source: Behind Closed Doors, AZSA Newsletter Archives